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Vikram Pandit's surprise catches D.C. off guard

Corbat now heads a bank that has come a very long way since nearly collapsing during the financial crisis in 2008. Citi is now profitable and the government says it earned a $12 billion return on its bailout investment. But as Pandit’s acrimonious departure illustrates, Citigroup still has no clear strategic direction and remains beset by leadership struggles that have plagued the bank for over a decade.

In Washington, there is little change immediately expected to happen inside the company's internal lobbying operation. Wolff joined the company in April 2011 following the departure of Nick Calio, who had led the bank's government relations operation and was a member of the senior leadership committee. Since then, she has worked to rebuild Citi's government relations operation, hiring John Emling.

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While a shakeup in the the Washington office isn't completely out of the question, one industry lobbyist familiar with the bank said that Corbat is more likely to focus on fundamentals of the business.

Corbat comes on board after Pandit clashed with O'Neill over his pay package, which during the crisis had been $1 per year, and the length of his next contract, sources familiar with the matter said.

O'Neill on an analyst call Tuesday evening denied that salary had anything to do with the departure, saying only that Pandit offered his resignation and the board accepted it.

But sources familiar with the bank say the two were regularly at a loggerhead, in large part because of their difference in backgrounds and personality.

Wall Street analysts were generally less then pleased by the move.

Richard X. Bove, an analyst who covers Citi for Rochdale Capital told POLITICO he was shocked.

"It doesn't make sense to me. Pandit has been one of the most successful CEOs in the banking industry," Bove said. "He took a company that was bankrupt and brought it back to a point where it was very liquid and where capital is no longer a problem. And outside of charges in the last quarter Citi had no big negatives in the numbers."

He added: "The bank calls me and tells me the board chairman, Michael O'Neill, has taken control and has a different vision and was therefore able to out this very successful CEO. It does not make sense to me."

This article first appeared on POLITICO Pro at 7:57 p.m. on October 16, 2012.